How does this fee-only advisor leverage his proprietary “College Pre-Approval” process to help families with college financial planning?
This article features an interview with Joe Messinger, CFP, ChFC, CLU, Partner and Director of College Planning with Capstone Wealth Partners, a fee-only registered investment advisor based in Ohio. With the firm, Joe provides comprehensive financial planning to individuals, high net-worth individuals and corporations through several pricing structures such as a one-time foundation plan, monthly fee and on-going annual fee. Based in Dublin, Ohio, Joe’s insight started off by working as a commission-based insurance sales person in 2003, before transitioning to launch his own RIA shop of Capstone Wealth Partners in 2009. You can learn more about Joe Messinger and Capstone Wealth Partners at the website of https://www.capstonewealthpartners.com/. Last but not least, thank you Joe for your time, insight and support in working with me on the article and presenting at the upcoming Strategic Insight 529 Conference 2017. We look forward to learning from your insight in the article below and at the event in Orlando. Please read the question and answers to learn about his perspective on college financial planning, and hope that the article provides you with an opportunity to learn more from your peers.
Question 1 (Paul Curley, Editor of the 529 Dash): What is working for you in terms of college financial planning?
Answer 1 (Joe Messinger, CFP, ChFC, CLU, Partner and Director of College Planning at Capstone Wealth Partners): It is unfortunate, but what is working for us is the fact that college financial planning continues to get more and more complex and there is more on the line than ever before. The costs continue to rise and the stress and anxiety for both parents and students around paying for college is at an all-time high. So, as a financial planning firm this is how we differentiate our practice.
Over the years we have developed a proprietary process called College Pre-Approval to help guide families through this process. Our strong belief is that what you pay for a college education should be pre-approved, just like when you go to a bank for a mortgage. This ensures that students graduate with manageable student loan debt without robbing mom and dad’s retirement.
Question 2: How do you integrate college financial planning into your discussions with a client?
Answer 2: Our practice is built to serve college bound families with students in high school so it is integrated into everything that we do. Nearly every client that comes in our office has a college bound teen. I understand that many advisors serve a wide variety of clients and that meeting with clients at this life stage may only come up a couple of times per year.
What we have learned working with these families over the years is that many of them feel guilty that they haven’t had the ability to save enough to give their children a great college experience. They are stressed out and anxious about having the money conversation with their children. Telling these parents things like “There are lots of ways to pay for college, and only one way to pay for retirement” is not helpful. Regardless how true that may be, Gen X parents number one financial goal is helping their kids pay for college. Whatever that looks like. The challenge is that the only training financial advisors have in college financial planning is on the investment and accumulation side. Where these families are desperate for help is how to shop for a college within their budget and how to actually pay the tuition bill every year.
It really all starts with a totally different discovery meeting than you may be accustomed to. Take off the financial advisor hat for a minute. They know that the money conversation is coming. Instead talk to them about what is important to them. I promise you that a retirement income plan or investment strategy is not it. We spend the majority of our time in the first meeting learning about our clients own college experience and what they envision for their kiddos.
Often times mom and dads college experience was very different. We start by telling them that we will absolutely dig into the finances but before we do, I’d like to spend some learning more about you and your college experience.
• Where did you go to school?
• What did you major in?
• How was it paid for?
• What do you remember about the application process?
Their perspective on college is often times very different. For instance, mom may have had her college 100% paid for by her parents and had a more traditional 4 year college experience and graduated with no student loan debt. Dad on the other hand may have worked his way through college part time and had to take on student loans to bridge the gap over a 6 or 7 year period. The cool part of this exercise is that it naturally leads to learning what kind of work they do now. These are dramatically different experiences and it shapes what they would like to do for their own children. Shockingly, this is a conversation that most parents have never had with one another.
Then we ask them to tell us all about their kids. Particularly students in high school that will be heading to college soon.
• What high school do they attend?
• What are they interested in? Do they play sports? Are they in the band?
• What type of student are they? ACT/SAT scores?
• Do they have an idea of what kind of major or career they want pursue?
• Any colleges that he/she is interested in?
Then we simply ask what their college funding philosophy is.
• Public University or Private college?
• Do you plan to have kids take out student loans or work during college?
• Do you want to pay for 100% of a state university or private college? 50%?
These are important questions that really shape the overall college budget. In a perfect world many parents would love to write a check and let their kids go wherever they choose. This just isn’t feasible for 99% of families. We help them understand that there are ways that normal families are paying for college.
• We will work together to craft a plan that will show you how to pay for all four years of college down to the penny with a combination of assets, cash flow, manageable student loans and tax credits. This will ensure that your students graduate with manageable student loan debt without robbing your retirement.
You see stress and anxiety level come down instantly.
At this point we have spent about 30 minutes listening. We know about their kids, their alma mater, where they work, why college is so important to them, and how they envision it being paid for.
Okay, now we can dig into the numbers and do the normal financial advisor “data gathering” and determine what is actually doable. For us this all starts with going through our College Pre-Approval process to determine the family’s college budget. Just like determining how much house one can afford with a mortgage pre-approval.
Question 3: How can product providers and states better support you?
Answer 3: As a fee only firm, we typically recommend our state’s direct 529 plan for a variety of reasons including the state income tax deductions, low cost, and ease of setting up. One thing that would be helpful as an advisor is if you had a 1 pager dedicated to financial planners that we could provide our clients to show them exactly how to establish their accounts and how to grant us LPOA. Or perhaps just a web page dedicated to this process. Showing the client that the 529 is not directly managed by your advisor, but they advocate utilizing this plan because as a fiduciary fee only planning firm this is what is in their best interest. I am sure there is a lot of red tape and jargon that would need to be ironed out to make this compliant for the 529 plan provider and the advisor, but this would be really helpful if it was turnkey for the advisor to hand off to the client to set up.
I know that some providers already offer this in a simple way, but making it very easy for the client to add the advisor as an agent authorization or limited power of attorney on the website when establishing an account would be awesome!
Once that LPOA is set up, have that clients 529 account feed into a dashboard that allows us to see all of the 529 plans that we are LPOA on in a single sign on. In addition, be able to create family accounts inside the dashboard so we can group all of our clients 529 accounts together and report in real time for a review meeting. This exists with some plans, but making this widely available would be great and a competitive advantage.
Question 4: What key trends do you see in college financial planning going forward?
Answer 4: The financial planning community cannot ignore college funding any more. The need to invest early for the cost of education is something that every advisor knows and can run a projection of the cost and what you need to invest to accomplish this goal. Parents are aware of the need to save as well. The challenge is that we are in the first generation of parents that will be paying on their own student loans well into their thirties and often times into their forties if they have advanced degrees. So the question becomes how to balance paying off your own student loans, saving for retirement, and saving for your own child’s education. Parents have a very short runway to save for college after they pay off their own student loans when their kids may already be 10 plus years old.
As a financial planning profession we cannot simply ignore this critical piece of a financial plan. The investment in education currently ranges from 100k to 250k per student. And that cost only continues to rise. I see the college purchase becoming much like a home purchase. I wouldn’t buy a home without a realtor. Why would I buy a $250,000 college education without a professional college funding advisor? We need to raise the bar in college funding advice. Saving for college and paying for college are two totally different things. Most financial advisors are simply not equipped with the training or tools to guide a family through this complicated process. Advisors that want to provide comprehensive advice to families with college bound teens will have 3 options:
1. Become well versed in college financial aid and funding strategies.
2. Appoint someone on your team to become your college-funding expert.
3. Outsource this important work to a college-funding expert just like you do tax or legal work.
Question 5: Are there any questions that I overlooked?
Answer 5: BIO
Joe Messinger, CFP, ChFC, CLU, is partner and director of college planning at Capstone Wealth Partners. He created College Pre Approval to end the student loan crisis one family at a time. A proven process to guide families and eliminate the stress and anxiety they have around paying for college.
Professional groups and parent organizations frequently ask Joe to speak at their meetings because he is a trusted authority in the area of college planning and funding. He has a gift for demystifying the college financial aid process, and setting families at ease in this stressful situation.
Through his work with Capstone College Partners, he is on a mission to raise the bar in college funding advice by empowering financial planners with the tools they need to help families beat the high cost of college. Joe teaches his proprietary process to advisors because he believes American families desperately need support, and we as an industry have a responsibility to help them.
Editor’s Final Note: Thank you Joe Messinger for your time and insight for in article, and in participating in the upcoming Strategic Insight 529 Conference 2017 at the JW Marriott Orlando Grande Lakes in September. Also, I would like to provide a special thank you to the readers for learning from your peers, for your support and your engagement.